Steering the Economy Amid the Storm of War

John Donne once wrote, “No man is an island.” The world is proving that statement true today. A war in a distant place can knock on our own front door, its impact arriving through prices, exchange rates, investment, and jobs. For this reason, Indonesia must keep a steady hand on the tiller.

Tensions between the United States and Iran have escalated again since early July 2026. The Strait of Hormuz is once more congested, shaking global energy flows. Oil and various commodity prices are climbing again. Global growth is forecast at only 3.0 percent this year, while global inflation has risen to around 4.5 percent. The global storm is thus moving ever closer.

However, a storm does not always sink a ship. The outcome depends on the strength of the hull and the precision of the captain. Indonesia possesses several buffers that are still functioning. Domestic growth remains sustained, primarily thanks to internal demand. The banking sector stays strong and the payment system reliable. The challenge is to keep all these buffers intact.

Three Waves of Pressure

The first wave comes from energy and commodities. The rise in oil prices increases transport, production, and distribution costs. This pressure then seeps into the prices of everyday goods. Yet, the rise in commodity prices also benefits some export sectors. Therefore, the impact is not black and white; some sectors are squeezed, while others catch a favourable wind.

The trade balance reflects this dual face. From January to May, a surplus of 4.03 billion US dollars was recorded. However, the oil and gas balance suffered a deficit of 12.28 billion US dollars. This means Indonesia still has a cushion from non-oil and gas exports. On the other hand, energy imports remain a hole in the ship’s hull. This hole must be kept from widening.

The second wave comes from the financial markets. Global investors seek safe harbours when the storm grows, moving funds towards the dollar and high-yield assets. The rupiah thus faces greater pressure. Nonetheless, the rupiah strengthened to Rp17,885 per US dollar, a position relatively stable compared to the end of June 2026. Foreign exchange reserves also remain adequate at 145.6 billion US dollars.

The third wave arrives through investment and confidence. Uncertainty often causes the business world to hold back its steps. Households also tend to tighten their belts. If this caution becomes widespread, it can turn into a slowdown. For this reason, confidence must be maintained like a fire in a storm. That fire may be small, but it determines the direction of the journey.

Maintaining the Anchor, Unfurling the Sails

Indonesia does not have to choose between stability and growth. The two are like an anchor and sails on the same ship. The anchor prevents the vessel from being swept away by the current. The sails ensure the ship keeps moving towards its destination. The policy mix must perform both functions.

The BI-Rate was held at 5.75 percent in July 2026. This policy safeguards the rupiah and curbs the transmission of inflation. At the same time, other policies continue to support growth. Banking liquidity is maintained so that the flow of financing is not blocked. Incentives are also being expanded to priority sectors. This is the balance between surviving and moving forward.

Inflation in June 2026 reached 3.34 percent. This figure remains within the national target range. However, pressure from energy and food prices is beginning to be felt. Non-subsidised fuel and avtur prices have risen. Some food prices have also moved higher. For this reason, the fence controlling inflation must be continuously reinforced.

Controlling prices cannot be done through interest rates alone. Food distribution must be smooth and supply must be maintained. The central and regional governments need to move in a single rhythm. Weather disruptions must also be anticipated early. Inflation is a small fire that can easily spread. Therefore, it must be extinguished before the flames jump.

Maintaining the Pulse of Transactions

Banking credit grew by 12.67 percent in June 2026. Investment credit even grew by 24.90 percent. These figures show that the financing engine is still running. However, many credit facilities remain unused. Funds are available, but some are still waiting for business courage. The challenge is to turn intention into real investment.

The banking sector also retains strong buffers. Capitalisation is high and non-performing loans remain low. Industry liquidity is still adequate. This condition allows banks to remain capable of absorbing shocks. However, liquidity does not always flow evenly. For this reason, interbank channels need to be continuously widened.

The payment system is the economy’s bloodstream. When the flow is smooth, economic activity can breathe. In the second quarter, digital payment transactions reached 16.07 billion, growing 36.88 percent year-on-year. QRIS transactions more than doubled. BI-FAST also processed 1.529 billion transactions.

These figures are not just technological records. Every transaction connects buyers, traders, workers, and producers. Digital payments reduce distance and accelerate the circulation of money. This system also helps MSMEs reach wider markets. However, innovation still requires safety barriers. Reliability, security, and consumer protection must go hand in hand.

Synergy in Safeguarding the Ship

Fiscal policy remains a crucial shock absorber. The state budget protects purchasing power and supports priority programmes. However, fiscal space is not a bottomless well. Every rupiah must be directed towards the most appropriate target. The precision of spending is now as important as its size. For this reason, data and digitalisation must serve as a compass.

Reducing inefficiency can also be a cheap stimulus. Simplified licensing can accelerate investment. Efficient logistics can lower prices. Legal certainty can restore business courage. Small improvements often produce a big push. This is additional wind for the economy’s sails.

Ultimately, economic resilience depends on confidence. The business world must remain brave enough to invest capital. Households must remain able to maintain consumption. The Government and Bank Indonesia must move in the same rhythm. The industry must continue to adapt and innovate. No ship can sail alone, but a well-steered vessel will reach its destination.